Mattel Incorporated (MAT) reported fourth quarter earnings of 89 cents per share. Excluding a tax benefit in the quarter, the company has earned 81 cents per share. The results are well ahead of the Zacks Consensus Estimate of 68 cents. The company had earned 49 cents in the year-ago quarter.

The better-than-expected results were primarily driven by strong sales of its Barbie dolls and Hot Wheels cars during the holidays. The company is also focused on controlling its expenses and has reaped its benefits. Mattel has recently given a new look to Barbie, which has attracted many customers.

For the full year 2009, the company reported a net income of $528.7 million or $1.45 per share, compared to the prior year’s net income of $379.6 million or $1.04 per share.??For the quarter, the company reported an operating income of $417.4 million versus $232.4 million in the year-ago period.??Worldwide net sales increased 1% from the prior-year quarter to $1.96 billion. Though U.S. gross sales reported a 2% decrease, international sales were up 3% and were positively impacted by changes in foreign exchange rates.

Worldwide gross sales for the Mattel Girls & Boys Brands business unit were up 4% versus a year ago. Worldwide gross sales for Barbie increased 12% compared to last year while Hot Wheels were up 16%. While core Fisher-Price increased 1%, American Girl line was flat compared to the prior-year period.

Gross margin was 53.4%, up 740 basis points versus the prior-year period. Selling, general and administrative expenses were flat as a percentage of net sales at 19.8%.
The economic slowdown has severely impacted discretionary consumer spending, which has deteriorated sharply in the U.S. and in many countries around the world. As a result, the balance sheets of toy manufacturers such as Mattel, Hasbro Inc. (HAS) and JAKKS Pacific Inc. (JAKK) have been impacted significantly. However, as one of the dominant companies in the industry, the economic downturn may enable Mattel to strengthen its position at the expense of smaller rivals.

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